Linux waddles from obscurity to the big time

By Byron Acohido, USA TODAY

SEATTLE — When investment bank Dresdner Kleinwort Wasserstein began making the switch to the Linux computer operating system in 1999, it did so to save money.

The Germany-based bank sought a less-costly way to calculate risks associated with its portfolio of investments. So it replaced 32 computer servers, based on the time-tested Unix operating systems, at an average cost of $50,000 each, with 40 Linux servers, at $3,000 a pop.

Then Dresdner discovered a bonus: Linux, the upstart open-source operating system, was not only cheaper — but also faster. The Unix servers took 17 hours to calculate how much cash the bank needed in reserve to offset its investment risk. The Linux servers made the same calculation in 11 minutes.

With a better and more frequent handle on its finances, the bank could shift tens of millions of dollars from its reserve account to active investments.

Not bad for a counterculture operating system — with a plump penguin mascot named Tux — that appears ready to soar. The momentum is building now because Linux has proved it can reliably handle tough computing chores — and because computer and software makers are increasingly making their products Linux-ready.

In recent months, companies and government agencies, from Wall Street to Hollywood and from Europe to Asia, have embraced Linux, adding to its legitimacy. Corporate backers of Linux, which is free, multiply as they stake out territory around the fastest-maturing operating system ever.

Already popular as an inexpensive driver of Web pages, e-mail systems and computer servers on the edges of corporate networks, Linux has begun seeping into corporate data centers where serious computing takes place. As it does, it promises to boost information-technology productivity.

But it could also discombobulate two of the biggest tech players — Sun Microsystems, the dominant Unix supplier, and Microsoft, which is pushing for Windows servers, not Linux, to usurp Unix.

"The real horse race, long term, is going to be between Linux and Windows," says Bill Claybrook, analyst at Aberdeen Group.

Sun has derided Linux, which is continually improved by volunteer programmers around the world who believe software should benefit society, as a "bathtub of code." With so many cooks, Linux is destined to splinter into incompatible versions, Sun says.

Microsoft paints Linux as a threat to intellectual property rights. Software developers who make their applications Linux-ready risk losing their proprietary products to the public domain, Microsoft warns.

From the Sun and Microsoft view, Linux has not proved robust enough to handle computing chores much beyond the edges of corporate networks. "All the noise and optimism of the early adopters doesn't in any way guarantee Linux will cross into the mainstream," says Peter Houston, Microsoft's Windows server products director.

Penguin spottings

Maybe not. But others say the drivers are in place for Linux to do just that.

With the economy struggling and corporate spending under pressure, companies and government agencies are looking to squeeze more for less out of data centers brimming with expensive hardware and software amassed in the go-go days of dot-coms and Y2K.

Meanwhile, Linux is turning up:

• On Wall Street. Merrill Lynch, Morgan Stanley, Credit Suisse First Boston and others are scoring results like Dresdner's with Linux pilot projects. IBM — an early and big backer of Linux — recently opened a Manhattan office to promote Linux among its financial services clients. And Reuters is deploying Linux servers to process the data and news widely used on Wall Street to make real-time trading decisions. "It's the start of something big," says Mark Hunt, Reuters' director of standards. "If you can use Linux in financial services, you can use it for anything."
• In Hollywood. Disney, DreamWorks, Pixar and others have ditched Unix in favor of Linux as the backbone of sprawling "rendering farms" where dense digital animation files are transformed into scenes in hit movies, such as Shrek, Lord of the Rings and Spirit.

"It's pervasive in entertainment," says Ed Leonard, DreamWorks' head of animation technology. "Anybody who's buying new machines is buying something running Linux for the bulk of what they do."

• In government. Military and intelligence agencies in the USA, Canada, France, England, Spain and Singapore are using Linux systems, among others. So is China's post office. Germany recently started standardizing public administration operations on Linux. Otto Schily, Germany's minister of the Interior, says Linux gives corporate and government users a way to avoid rigid licensing agreements with "monoculture" suppliers. "Linux gives us more independence," he says.

Sun, IBM and Hewlett-Packard sell Unix systems powered by inseparable software and hardware, which they supply. Microsoft's Windows servers run on inexpensive Intel chips. But Microsoft exacts stiff fees for use of its proprietary source code, which allows software and hardware to work together.

By contrast, Linux runs on Intel chips, Unix processors, even Apple hardware. Anyone can download its source code for free at www.kernel.org. Most users purchase Linux from distributors such as Red Hat, SuSE or Mandrake, who add coding to make it ready to perform specific tasks. "Six months ago, we saw the tornado of (business) demand about 50 miles away. ... Three months ago, it was at our doorstep. And now we're inside the hurricane," says Mike Evans, Red Hat's vice president of business development.

Credibility with alliances

What a long way Tux has traveled in the 12 years since Linus Torvald, a University of Finland graduate student, began fiddling with a Unixlike operating system.

Top programmers flocked to Linux and, guided by the iconoclastic Torvald, came to view themselves as software purists untainted by the profit motive. Because anyone can see the guts of Linux, security holes get spotted and fixed quickly. Because Linux works on almost any hardware, it can be easily adapted to specific tasks. "Linux has matured faster than any operating system in history because of the beauty of the collaborative, open source environment that allows you to add features and functionality quickly," says Steve Solazzo, IBM's Linux general manager.

With customer awareness of Linux growing, hardware and software makers have been forced to come up with Linux strategies — or risk missing out on a burgeoning market.

A limited selection of software to help companies perform specific tasks was once Linux's Achilles' heel. No more. SAP, Veritas, J.D. Edwards, PeopleSoft, Borland and other big-name suppliers of business automation software for Unix and Windows now offer Linux versions, as well.

In June, Oracle, the dominant supplier of database software for Unix systems, announced an alliance with Dell Computer, the No. 2 personal computer maker, and Red Hat, the leading Linux distributor. The goal: to pitch inexpensive Linux servers equipped with a beefy Oracle database to do the same back-office functions normally done by Unix servers, such as store data, perform accounting functions and interact with employees, customers and suppliers.

As a show of faith, Oracle has begun shifting about a dozen of its own back-office systems from Unix to Linux. Giga analyst Stacey Quandt says the Oracle-Dell-Red Hat alliance has the look of a milestone.

"It's a major inflection point that gives Linux credibility," she says.

Oracle, IBM, which has about 300 Linux customers, and H-P, which supplies most of the Linux servers in Hollywood, have figured out a way to ride the Linux bandwagon.

That will be tougher for Sun and Microsoft. Both live and die by licensing fees stemming from their proprietary operating systems. To the extent Linux rises in corporate use, they stand to diminish.

Sun marketing director Peter Ulander contends Linux will find its sweet spot in "the Microsoft realm," while Microsoft's Houston says customers will "prefer Windows as an alternative to Unix or Linux."

Companies like Dynamex will decide.

The Dallas-based emergency package delivery company has 6,500 employees and annual revenue of $240 million. In recently consolidating 38 different front-end computer systems — the servers that take in data from employees, customers and suppliers — Dynamex selected Linux.

Cost savings and ease of use by the company's Unix-savvy tech staff drove the choice, says Jim Wicker, information services vice president.

Later, a Dynamex technician used Microsoft tools to design the company's online package-tracking program. It should have been a slam-dunk for Microsoft to sell Dynamex its Windows server products to run a program created by Microsoft tools. But Wicker again chose Linux.

"We wanted to run it on Linux because it was easy and quick to launch," he says. "Plus, it was a fraction of a fraction of the cost of a Microsoft license."

Now, Wicker is looking to update the company's back-office systems that handle payroll, accounting and other critical chores. He will evaluate Unix and Windows. But with Linux already running other systems, Tux the penguin seems hard to pass up. "Linux is first on the horizon," Wicker says.